Festive Season Boosts Jewellery Demand, But Smaller Players Struggle Amid High Prices

Despite high gold prices, jewellery demand is expected to pick up during this year's festival season in India. Many consumers had delayed their purchases due to sky-high prices but are now taking advantage of slightly lower rates. According to industry participants, although demand for jewellery may be higher than last year, sales volumes are still likely to be subdued due to the high cost of precious metals.

Smaller jewellers are expected to struggle as consumers opt for larger and more trusted retail chains, which can offer higher discounts and better design value. The trend is not about postponing purchases but rather getting greater design value within a comfortable ticket size, said Aditya Modak, Director at PNGS Reva Diamonds.

The outlook remains damper for smaller players as they struggle to provide high-quality products with limited cash flow. Meanwhile, larger chains are thriving in this high-price environment due to their stronger balance sheets and higher volumes. As gold prices are still relatively high compared to last year's festival season, consumers may opt for lower-karat gold jewellery or studded pieces to stay within budget.

The Indian Bullion and Jewellers Association (IBJA) expects a 15-20% year-on-year volume growth this festive season as pent-up demand meets improved sentiment. However, industry participants note that the sales volumes would be offset by higher realisations due to elevated prices.